Avantax, Inc.

Hello and welcome to the Avantax 4th Quarter 2022 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by 0. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your telephone keypad. To withdraw from the question queue, please press star, then 2. Please note, this event is being recorded. I would now like to turn the conference over to D. Luttrell. Please go ahead.

Thank you and welcome everyone to the Avantax fourth quarter 2022 earnings conference call. On Wednesday afternoon, following market close, we posted our earnings release and supplemental information on the investor relations section of our website at Avantax.com. I am joined today by Chris Walters, Chief Executive Officer, and Mark Melman, Chief Financial Officer. Before we begin, let me remind everyone that today's discussion contains forward-looking statements that speak only as of the current date. As such, they include risks and uncertainties, and actual results and events could differ materially from our current expectations. Please refer to our press release and our SEC filings, including our most recent Form 10-K and Form 10-Q for more information on some of these specific risks and uncertainties We assume no obligation to update our forward-looking statements except as required by law. We will discuss both GAAP and non-GAAP financial measures today. Our earnings release and supplemental financial information are available on the investor relations section of our website at avantax.com and include full reconciliations of non-GAAP financial measures discussed to the nearest applicable GAAP measure. With that, let me hand the call over to Chris.

Thank you, Dee. Good morning. Good morning. I'm pleased to share our fourth quarter 2022 earnings results for the first time under the Avantax name. On January 26th, we changed our corporate name from Blue Cora to Avantax and changed our ticker symbol to AVTA, marking our next step as a pure play wealth management company. During our third quarter earnings call, we shared that we had agreed to sell our TaxAct software business to an affiliate of Sinvin for $720 million, subject to post-closing adjustments. On December 19th, we announced the completion of the Sale of Tax Act, which positioned us to shift our organization to reflect our singular focus on continuing to grow our wealth management business and return capital to shareholders. We successfully achieved these milestones while at the same time having a record-breaking year in many of our key wealth management operating metrics. I would like to thank all of our financial professionals, employees, and board members for their contributions to realizing these accomplishments. As noted, we have made significant progress on our more focused operations and capital structure. On operations, we have begun streamlining our organization and are positioning our team to execute our wealth only growth strategy. As part of this work, we have announced the plan to reduce the size of our board of directors at our 2023 annual meeting and the departure of multiple executives whose contributions are greatly appreciated. Our team has been aligned to deliver our strategic priorities of growing NNA by supporting existing financial professionals' growth and recruiting new financial professionals and accounting firms, retaining existing financial professionals by providing exceptional service and tools, and when in the best interest of the client, shifting to a higher value mix by increasing fee-based assets and continuing RIA acquisitions. We've also made targeted incremental investments to support our financial professionals and affiliated CPA firms. On capital structure, in January, we repurchased 460,160 shares for a total of $12.5 million. On January 24th, we entered into a new term loan facility of up to a maximum principal amount of $270 million that also provides for a $50 million revolving credit facility. This facility has a lower interest rate compared to our previous credit agreement, has a delayed draw feature that further enables us to keep interest costs down, and does not have significant upfront costs as compared to other options. On January 27th, we announced that we commenced a modified Dutch auction tender offer to purchase up to $250 million of our common stock for between $27 and $31 per share. This is in addition to our approved $200 million share repurchase authorization. Moving on to our results for the fourth quarter, we continue to excel across the most important indicators that we use to measure the performance of our business. First, our net positive flows. We have seen net positive asset flows for the fourth consecutive quarter. In Q4, we had $495 million in net new assets, up $115 million over last quarter and setting a new record of $1.3 billion for the business for the trailing 12-month period. Second, our recruiting. We also continued to successfully recruit financial professionals with over $401 million in newly recruited assets during the fourth quarter, finishing another record year, adding approximately 79% more in recruited assets than our next best year. We also recruited three new CPA firms to Avantax Planning Partners and have a strong pipeline for 2023 in both our independent broker-dealer model as well as our employee-based RIA. Third, our firm acquisitions. This quarter, we marked a milestone with 20 acquisitions completed in 20 months, increasing total client assets held in our employee-based model to approximately $7 billion, up from $4.4 billion a little over two years ago. Fourth, we continue to retain productive financial professionals. Our consistently high production retention rate came in at 99.3% for the quarter. Of the financial professionals who departed during the quarter, 90% were non-producing financial professionals with less than 50,000 enrolling gross production. Lastly, our financial professional satisfaction. We regularly conduct financial professional satisfaction surveys to assist us in better meeting our financial professional needs. In the survey, our net promoter scores improved by 14 points from our spring 22 survey and 21 points from winter survey last year. In short, we are executing well on our mission to be the leader serving a community of CPAs, tax professionals, and tax-focused financial professionals by providing clients tax-advantaged investment solutions, innovative technologies, and tax-inclusive financial planning. We remain focused on extending our lead on key differentiated aspects of our strategy, which include nurturing and growing the largest community of tax-focused financial professionals in the wealth management industry through training, growth communities, coaching programs, and purpose-driven events, providing best-in-class service and support, and delivering capabilities to accelerate our financial professionals' growth, including continuing to develop investment solutions, growth consulting, practice management, and digital products. In addition to these efforts, we are providing opportunities for financial professionals to work with Avantax in the way that aligns with their priorities, which has led to a rapidly growing Avantax Planning Partners, our employee-based RIA, and resulted in a significant pipeline to further grow this portion of our business. Our pure play wealth management business is effectively executing on plan, is serving our financial professionals and end clients well, and is taking actions on our capital structure that, together, we believe will result in an exciting future for our financial professionals, employees, and shareholders. Now, I'll turn it over to Mark, and we'll be happy to answer questions after the prepared remarks.